1 Regional Development in Italy: the North South Divide and the case of Calabria
1.1 Introduction
The way in which innovation takes place in a country - from the firm up to the national level - dictates the path of it’s regional development. The path toward high income status for countries in the West has been through movements of labour out of low productivity sectors like agriculture, and into high productivity manufacturing. Today, there is a shift towards high-skilled service industries and the knowledge economy as the nexus through which innovation takes place and drives growth. In Italy, regional inequalities have been exacerbated by a rise of high-skilled manufacturing and later services in the North and a lagging behind in terms of growth in the South. National-level wage setting focussed on industries in the North has resulted in a higher than optimal level of unemployment in the South, with wages set above the marginal product of labour. Lacking positive spillovers from highly dynamic industries, Calabria has fallen behind the national average in terms of regional GDP, and is seeing slower population growth than it’s neighbouring regions in the North.
This essay examines the way in which Calabria in Southern Italy has failed to keep pace with aggregate growth in the country through the lens of evolutionary economic geography focussing on four pillars of understanding regional growth: first, the timing of the adoption of general purpose technologies, second, the space along which comparative advantages were generated, third, the pace of structural change and fourth, the kinds of spillovers affecting efficiency within the region. The essay concludes by outlining a tool created to analyse these kinds of regional differentiations in Europe using data from the Rosés-Wolf database on regional GDP1.
1.2 Context
Calabria is a region on the Southern tip of Italy’s boot, rich in history and fecund agricultural land. It is a producer of many geographically protected agricultural products including varieties of olive oil and cured meats (Piscopo et al. 2021; Romeo et al. 2014). It is the world’s largest producer of citrus oils used in food, beverages, and medical preparations (Navarra et al. 2015). Despite having a long coastline, three of the largest national parks in Italy and ample natural beauty, Calabria is not a popular tourist destination in Italy, evidenced by the number of tourist nights spent in each region in 2018, depicted below.
Figure 1.1: Italian regions by number of visitors in 2018. Source: The Italian National Institute of Statistics
1.3 Economic growth patterns in Calabria 1900-2015
1.3.1 Pillar one: time
The first pillar of the evolutionary economic geography framework asks what is possible given the historical context and the time in which development takes place. I begin by examining the evolution of regional GDP in Italy.
Calabria evidences the stark North-South divide in Italy, with the lowest regional GDP per capita of the 20 NUTS2 regions in Italy. in 2015, the latest year in the Roses and Wolf dataset, the magnitude of regional GDP per capita in Calabria is half of that of Lombardia, whose capital is Milan.
Figure 1.2: Regional GDP per capita in Italy 1900-2015 highlighting Calabria and Lombardia. Source: Roses and Wolf database on Regional Development in Europe
This is due in part to it’s sectoral employment share. In contrast to Lombardia in the North, Calabria has a relatively high share of employment in the agricultural sector since 1900, and the labour force has not shifted into industry as has been done in the North. One reason for this is the natural comparative advantage that the Southern region has in agriculture, given its Mediterranean climate which is more suitable to the cultivation of crops that require sunlight and detest frost, a feature which I touch on in the second pillar, space.
In the figure below we can see that the yellow sliver of the stacked area chart for Calabria is narrow, and expands only modestly since 1950. In contrast, the industry share of employment in Lombardia is wide, displacing agriculture (orange) to a large extent since 1900 such that by 2015, there is almost no agricultural employment in the Northern region. The picture for Italy as a whole is between these two extremes, and the services share of employment is remarkably similar across the three regions depicted.
Figure 1.3: Sectoral employment shares in Italy 1900-2015 highlighting Calabria, Lombardia and Italy as a whole. Source: Roses and Wolf database on Regional Development in Europe
Calabria also sees some of the highest rates of unemployment in Italy, with Eurostat data evidencing a rate of unemployment above 20 percent since 2012 in the region. The level of unemployment is more than double the national average (shown in orange) and four times that of Lombardia (shown in purple) in 2020.
Figure 1.4: Unemployment by region in Italy highlighting Calabria, Lombaria and Italy on aggregate. Source: Eurostat
The first pillar asks what is technologically possible given the technologies available at the time. While geographically disaggregated data on technology adoption was difficult to source, we can look at the kinds of general purpose technologies adopted in Italy as a whole, compared to other OECD nations. This may inform the distinction created between North and South in terms of the dynamics of innovation.
The figure below depicts the historical adoption of different kinds of general purpose technologies over different time periods, weighted by the population in each time period. Italy is highlighted in dark green while the United Kingdom’s path is shown in orange for context. The grey lines are all other OECD nations. It is evident that in the important categories energy output and early communication technologies (mail and newspaper circulation), Italy falls in the bottom quartile of all OECD nations. This relative insufficiency in early communication technologies may have contributed in part to the fragmented nature of innovation that Leydesdorff (2021) argues splits the North and South in Italy, and is returned to later. However, contemporary communication technologies of the digital age like mobile phones and personal computers present a more mixed picture. Despite a late take-off, the number of mobile phones per person in Italy in 2000 is higher than comparator the United Kingdom, and outperforms the majority of OECD comparators. While personal computers per capita in Italy lag behind other OECD nations, towards the end of the period there is a sharp increase signalling a potential catch-up.
